Health Law Pointers - Volume X, No. 3

New Page 1

Compliance Developments


A.        Targeted Areas for Compliance.


            At a recent conference on compliance held at the University of Rochester, Jim Sheehan, of the Office of the State Medicaid Inspector General, identified “hot areas” for enforcement in the next several months. While seemingly targeted toward health care facilities, the initiatives may apply to providers too.


            1.         Existence of “effective” compliance program.

            2.         Home health/personal care (during hospital stay). 

            3.         Payment Error Rate Measurement (PERM). 

            4.         Duplicate payments/same time period (ex. ambulance use during hospital stay or DME during nursing home stay). 

            5.         Supplemental/dual payments (newborn and maternity payments).

             6.         DRG assignments and support.

             7.         Rebilling of denied, disallowed or voided claims (involving dead patients or “impossible” claims).

             8.         Credit balances (per regulation, must be refunded within 30 days of receipt of reimbursement).

             9.         “Never Events” (hospital inpatient errors for which no payment is allowed).


B.         Program Integrity.


            At the conference, Mr. Sheehan confirmed that the new enforcement model is one whose focus is on reducing improper program payments, rather than concentrating on the “intent” of individual and entity “actors”.  As such, the key questions include:


            *          What type of improper payments exists?

            *          Why do such payments occur?

            *          Are there systems and controls in place?

            *          Why didn’t such controls work?

            *          What improvements are required?

            *          What encouragement is needed to implement effective systems?


            Because of this, many attorneys now advocate an “effective” compliance program for clients, as the failure to have an “effective” program may be a basis for program exclusion.


C.        Effectiveness and Audit Action.


            What is meant by an “effective” compliance program?  First, the individual or entity must be prepared to disclose the fact of an overpayment, if received, once an overpayment is identified.  Second, an effective program requires periodic risk assessment, and strong remedial measures promptly carried out.  To accomplish this, the individual or entity must be able to identify system vulnerabilities, and take action to prevent recurrence.  OMIG expects a substantive role for the compliance officer, participation by employees and staff, and a stronger Board level of knowledge and involvement.


            We are also advised that model compliance guidance will be forthcoming for hospitals and managed care organizations, and that effective October 1, 2008, new “final audit reports” will be accessible from the OMIG website.  Additionally, Medicaid “integrity contractors” (“MIC”) are anticipated to be engaged by 2010 to conduct post-payment audits of Medicaid providers through a combination of field audits and desk reviews.



Practice Fraud and Hard Times


            Tough economic times affect us all.  However, employees facing unexpectedly large medical bills, family loss in income, or other financial setbacks may need money now.  Practices should be especially alert for employee-related financial malfeasance, such as embezzlement, in these times.


            Fraud is said to require opportunity, motive and lax personal ethics.  You may not be able to insulate your employees from situational pressures (job frustration, high debt, and family illness) or judge the strength of your employee’s beliefs.  However, there is preventative action that can help;


            1.         Be Alert; and

            2.         Adopt basic financial controls.


            Know your workforce. 

Recognize changes in employee behavior or attitude, and inquire.  Is an employee upset due to family or personal problems?  Have there been noticeable changes in spending patterns?  Has the employee been difficult to work with, or openly resentful of the practice or its owners?  Is the person responsible for accounting for cash deposits or vendor payments refusing to take vacation or lengthy vacations?


            Know your patients. 

            A sudden increase in patient complaints about double billing or unpaid balances may indicate a possible diversion of practice revenues.


            Adopt and enforce basic internal controls.

            Establish internal controls to record the receipt of money and periodically audit daily deposits.  Clearly communicate employee job responsibilities.  Segregate certain duties (receipt of deposits from entering receipts into books and records).  Avoid unnecessary delegation of check signing authority.  Request documentation in support of the invoice prior to any payment.


            Bottom Line?

            Screen employees carefully, set a good example yourself, and take an active role in the management and operation of your practice.  Your indifference to the financial administration or management of your practice is an invitation for problems.


Transition to Part-Time Practitioner


            Many professional practices wrestle with a variety of management issues when a partner announces his/her intention to reduce practice responsibilities as retirement approaches.  The concerns can range from compensation to hours of service, from call coverage duties to management authority, and the discussions can be bitter.  Proper planning can help to establish an amicable transition, but it is harder to do so when the event is unexpected, as in the case of an unwanted disability.  At the outset, practices should keep an open mind on the subject and refrain from making a hasty decision that will only generate resentment.  Too often, the prospect of lower earnings and an increased workload cloud our judgment.  However, the matter may be made worse if a forced withdrawal results in the loss of an experienced physician with a strong referral base, loyal patients and a favorable community presence.


            The keys to a successful transition are as follows:


1.                  Encourage a candid discussion of the question.

2.                  If possible, develop guidelines in advance of transition.

3.                  Develop a succession plan, including recruitment objectives.

4.                  Establish clear practice expectations for full-time physicians.

5.                  Organize a fair compensation and benefits package for participants (lower salary or productivity-based compensation, additional time off, new coverage arrangements that offer remaining partners a monetary incentive).  Recognize that past practice expansion or debt may make it difficult for a practice to allow a part-time professional to shed overhead responsibility immediately.  A transition period may be required.

6.                  Discuss governance issues.

7.                  Establish time limits for part-time employment as a partner (“sunset” provision) and allow for transition to permanent retirement.

8.                  Discuss impact (if any) on buyout formula or timing of payments.


In an ideal world, the affected professional should offer the practice adequate advance notice of his/her intentions, to allow sufficient time to adjust work schedules, recruit a successor, and gauge the financial impact.  Having guidelines in place in advance that have been approved by the partners offers certainty and assurances for fair treatment.


Newsletter Sign Up